The Changing Face of Real Estate Franchise Brands

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Jul 7, 2009 1:50:10 PM

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There is always a debate going on in the real estate industry about which company is the largest. As some don't disclose financials and others use different measuring criteria (offices, agents, sales volume, profitability, brand recognition, etc.) we have many potential "winners".

This article is however not about who is #1 or #2 but rather what has happened to real estate franchise brands over the course of the last 20 years, and does that information in any way provide us with a trend line that may afford likely scenario's going forward.

To start off, we need to look at the most prominent brands 20 years ago; 1989. I revisited many "old" publications of those years, the REAL Trends Report and the leading Real Estate Report of the time; the Roulac Report by Deloitte, Haskins and Sells (1988). Combining all that intel I have compiled a list of what were, in probable order, the most likely candidates for the most prominent Residential Real Estate Franchise brand of 1989.

Century 21
Coldwell Banker
ERA
RE/MAX
Realty World
Merrill Lynch
Red Carpet
Help-U-Sell
Gallery of Homes
Better Homes and Gardens

I have followed the same criteria and researched the REAL Trends Report again and the leading Real Estate Report of today, my Swanepoel TRENDS Report. The most likely candidates for the most prominent Residential Real Estate Franchise brands of 2009 are:

RE/MAX
Coldwell Banker
Century 21
Keller Williams Realty
Prudential Real Estate
ERA
Realty Executives
Sotheby's International Realty
GMAC Real Estate
EXIT Realty

Analysis:

So here is where the interesting part comes in. Although not based on any scientific hard facts, the following has occurred during the past 20 years:

40% have remained a Top 10 national real estate brand (C21, CB, ERA & RE/MAX).
20% exchanged their brand for a new brand and were still able to hold on; remaining a Top 10 brand (Merrill Lynch became Prudential and BH&G became GMAC Real Estate).
10% dropped off the Top 10 list but still operate as a national franchise (Realty World).
30% fell on even more difficult times and went through different types of trouble including bankruptcy. (Gallery of Homes, Help-U-Sell and Red Carpet). It is interesting that one or two of the brands are staging a comeback.
10% of the brands on the 2009 list had improved their rankings (Realty Executives).
30% of the brands on the 2009 list were not even in real estate franchising back in 1989 (Keller Williams Realty, Sotheby's International Realty and EXIT Realty).

Probing Questions:

There are of course many different deductions that can be made using above information resulting in hours of interesting discussion. Due to the brevity of this article I am going to list just five observations that I think are worth consideration:

Will the three brands that have dominated for the past 20+ years maintain their stronghold; RE/MAX, Coldwell Banker and Century 21?
Will newcomer Keller Williams Realty that surged into the top 5 be able to continue its rise and unseat one of the top 3 established brands? If yes, who will be the one to loose its top 3 ranking?
Twenty year plus top 5 brand ERA has for the first time dropped out of the top 5. Is this a sign that they will continue a downward slide; ultimately out of the top 10?
Brand changers (Merrill Lynch became Prudential and BH&G became GMAC Real Estate) have shown that brands are not always that important as both survived and held on to similar top 10 rankings in 20 years. GMAC is however scheduled for another name change within the next year. Will they still be able to hold on to their top 10 ranking after a second name change?
Will companies such as Realty World, Red Carpet and Help-U-Sell that dropped off the top 10 and are staging a comeback be able to regain their former top 10 status?

Closing comments:

There and numerous new franchise brands bubbling under the radar such as Weichert Realty, Assist-to-Sell, ZipRealty and even Better Homes & Gardens (not same company as before but the same brand) that could very well be a top 10 real estate brand within the next five years.

Although this exercise was more one of fun rather than trying to predict the future, it does show us that even in the "big picture" of large national brands the world is ever changing and that anything can happen.

For daily updates and discussion follow me at www.facebook.com/swanepoelinternational or www.twitter.com/swanepoel

Ron and Alexandra Seigel

Group Member

Jul 10, 2009 9:41:02 AM

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Stefan:

This is an interesting post. To remain in the top 10 of anything, you must take care of your target market, stay ahead of your closest competitor and deliver extraordinary value.

In order to do that, management has to be able to turn on a dime, i,e, shift rapidly with the times, and execute quick changes when necessary. Management has to stay informed and move ahead of all their competitors. They need visionaries and mavericks in their organizations to stay fluid.

Thanks for starting this.

Leslie Edwards

Group Member

Jul 14, 2009 9:02:33 AM

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Stephan,

Thanks for the article. It will be interesting to see how the franchises rank in 10 years. One thing about real estate is that if you don't like the ways things are going, just wait, they'll change.

leslie edwards, RE/MAX Around Atlanta 770.460.9448

Social Media Marketing Guru

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Jul 20, 2009 5:48:11 AM

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Keep an eye on Exit, their multilevel approach tih ongoing franchise revenues is a better model for the future - the new trend will be no desk, no bricks and mortor: I know, nobody wants to hear this, but it is the innevitable truth: nobody sits at all those empty desks, and they have better things to do with their time than working 9-5.

There will always be offices, more like sales offices with meeting rooms, individual offices will be at home or at the club.

I am trying to figure out how to capitalize on this huge trend now.

Israel Rothman, http://socialmediasystems.com

Margo Grimshaw

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Jul 21, 2009 10:47:18 AM

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I agree completely. I was a Realtor for many years, but due to the economy, I am now the Sales and Marketing Director for a title insurance company. Realtors are my customers and I go to the various offices in my area to do my marketing, but they are not in the office anymore for the most part. My husband is a Realtor and he never goes to the offce unless he needs to meet a client there.

Social Media Marketing Guru

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Jul 21, 2009 11:19:12 AM

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Yes, Margo: now the $64,000.00 question: how to make money from it.

A title company should sponsor a community blog, convince realtors to participate in content production for advertising purposes.

Sharon Koziel

Group Member

Jul 21, 2009 1:58:29 PM

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Margo if you live in a state where Title companies can sponsor education classes I think that would get your name out there. If you can't do that I would go to the Associations weekly meeting and give a gift from the title company. Of course it should be branded. Sharon

Margo Grimshaw

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Jul 22, 2009 7:55:20 AM

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I do belong to two local Realtor associations, as well as, two WCR Chapters. I am very active in all of these, plus our local chamber of commerce and the builder's association. I do attend meetings and have give-aways and sponsor various events. It is all paying off for me. I am the Chairman of Special Events for one of the Realtor associations and have been working very hard at getting the Realtors out to these events. It is slowly working it gives them a great opportunity to network with each other since they don't see each other much anymore because they are working at home. Thanks for your suggestions.

Social Media Marketing Guru

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Jul 22, 2009 8:16:45 AM

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Realted, Margo: I went to five minute speed networking last night.

I have been a networking whore for many years and built multiple huge B2B companies that way: but I have never been to a better one: the speed networking venue (like speed dating but for business) is the best there is. I spent from 6:30 untill 9 pitching pre-qualified prospects, have apppointments for today, and committments form over 10 people that they want to do something with me.

You can do a meetup group (meetup.com) which is how this group found me, and how you can instantly reach thousands or even millions in your immediate area, and create your own speed-networking around whatever venus you choose ;-)

This kind of activity can feed a local community blog, and become a valuable website property, a valuable favor you can do for a freind, and a valuable value-added part of your listing presentation.

So empowering if you really get how things have changed. I am excited over and over again.

Israel Rothman, http://socialmediasystems.com

Margo Grimshaw

Group Member

Jul 22, 2009 10:46:45 AM

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Hi Israel - I am in two networking groups now and we do the speed networking too - not always but every now and then. The problem for me is since I represent a title insurance company, I need to be with Realtors, Lenders and Builders. These are my customers. The networking groups are filled with lots of different fields, which works great if you are a Realtor, but not so good for me. This is why I spend most of my time and energy with the Realtors, Lenders and Builders. We are a new company, and I know everyone in my area because I have previously been a Realtor here since 1991. However, they have relationships with other title companies and getting them to jump ship and come over to my company is not that easy. It will take time and persistance.

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